UK Politics

Cameron: IMF funding boost will not risk UK money

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Media captionDavid Cameron said he had protected the interests of British taxpayers

David Cameron has said increasing UK contributions to the International Monetary Fund "does not put Britain's taxpayers' money at risk".

The PM said it was "in our interests" to support the IMF but stressed again that the money would not support a eurozone bailout.

He also suggested any increase would not be put to a vote in the Commons.

Labour's Ed Balls said the IMF should not be called in to do the job of the European Central Bank.

At the end of the two-day G20 summit in Cannes, which has been overshadowed by uncertainty over the eurozone crisis and political turmoil in Greece, Mr Cameron said an agreement had been reached that "the world stands ready to increase the resources of the IMF as required".

Trading nation

But asked why the amounts countries might contribute had not been agreed - he said: "I think the very worst thing would be to try to cook up a number without being specific about who was contributing what."

He said it was in Britain's interests, as a trading nation to support the IMF - which was set up to help countries in distress all around the world - and send the message from outside the eurozone that they were being responsible and wanted the global economy to grow.

But he said: "I'm not asking British taxpayers to contribute to the IMF because European taxpayers aren't doing enough. Britain will not invest in a eurozone bailout fund. Britain will not invest in the IMF so the IMF can invest in a eurozone bailout fund. That is not going to happen."

"Resourcing the IMF is not a substitute for the eurozone dealing with its own issues and problems. Clearly there is more action that is required by eurozone countries in terms of putting flesh on the bones of that deal that they did."

"No government has ever lost money on lending to the IMF. It doesn't add to your debt, it doesn't add to your deficit. It is the right thing for an advanced economy like ours to do and we should continue to do so. But it does not put Britain's taxpayers' money at risk - it is just merely the most sensible thing for us to do to support the economy."

Commons vote

Chancellor George Osborne pledged that Britain would not go "out on a limb" in increasing its IMF backing and would not contribute "disproportionately".

Earlier this year, MPs voted to increase the UK's annual subscription to the IMF from £10.7bn to £20.1bn as part of an overall increase in the IMF's funding base agreed in principle in 2009.

However, more than 30 Tory MPs - as well as Labour - opposed the move.

The BBC's political editor Nick Robinson said Mr Osborne faced a fight if he agreed to increase UK contributions with Conservative Eurosceptics potentially joining forces with Labour.

Asked whether there would be another Commons vote should the UK boost its IMF funding, Mr Cameron said the last vote had "allowed for some extra headroom and what we would anticipate doing would be within that headroom".

Labour's shadow chancellor Ed Balls warned against allowing IMF to step in when eurozone countries were "abjectly failing to do what is necessary to get growth and jobs moving". And he said the European Central Bank was "not willing to put up the resources".

'Sat on sidelines'

Mr Balls told the BBC Radio 4's World at One programme: "I support an increase in resources for the IMF but what I want to do is make sure David Cameron and George Osborne are clear that directly or indirectly this money will not end up supplanting the European Central Bank and putting liquidity support in for Spain and Italy.

"We can't have the IMF effectively becoming the central bank of the eurozone. It's not for British or American taxpayers to stand behind Italy or Spain."

Labour leader Ed Miliband said the G20 summit should "not have been allowed to end without a clear resolution for the crisis in the eurozone".

He said: "I'm afraid what we have had is a prime minister who has sat on the sidelines and not shown the leadership that Britain needs."

As a member of the IMF, a global body which seeks to secure the stability of the international financial system, the UK is potentially liable to meet any request for increased funding to deal with financial crises in specific countries or regions.

Ministers point out that the UK's subscription is in the form of loan guarantees that are only called upon when needed and members have the power to oppose specific IMF programmes.

They also say subscription increases do not increase the UK's deficit as the UK is paid interest on the loans, made via its currency reserves.